For a fifth consecutive month, the volume of existing home sales dipped by 5.4% in June from May to a seasonally adjusted annual rate of 5.12 million, according to the National Association of Realtors (NAR). Home sales are down 14.3% compared to June of 2021.
NAR data indicates that home sales fell in all four regions annually, and saw declines between May and June nationwide except for in the Northeast where they stagnated.
The median home sale price spiked 13.4% from a year ago to $416,000, a new record high and the 124th month in a row of annual increases, the longest-running streak on record.
Another record was hit in June with average days on market falling to 14 days (down from 17 days in June 2021), with prices rising in all regions. Since NAR began recording this data point in 2011, it has never fallen this low.
“Falling housing affordability continues to take a toll on potential home buyers,” said NAR Chief Economist, Dr. Lawrence Yun. “Both mortgage rates and home prices have risen too sharply in a short span of time.”
Practitioners feeling a shift in the market are right – we’re in new territory now.
Meanwhile, inventory rose to 12.6 million, or 3.0 months at the current monthly sales pace. That feels like relief in a sector where inventory has remained restrictively tight in recent years, but a 2.4% annual increase is still not enough to alleviate pressure on the market.
Dr. Yun has said hundreds of times over the years that new home construction is the only meaningful answer, but with housing starts just hitting their lowest level since September, no one is holding their breath for relief.
“Finally, there are more homes on the market,” Dr. Yun observed. “Interestingly though, the record-low pace of days on market implies a fuzzier picture on home prices. Homes priced right are selling very quickly, but homes priced too high are deterring prospective buyers.”
For years, first time home buyers accounted for 33-34% of sales, and are now down to 30%, but up from 27% in May. This metric is used to gauge the health of the market, and when first time buyers are edged out of the market, there are problems at hand.
Individual investors or second home buyers accounted for 16% of all home sales in June, and all-cash sales accounted for 25% of sales, both unchanged from May.